Rex and Kelsey are partners who share income in the ratio of 3:2. Their capital balances are $95,000 and $140,000, respectively, on January 1. The partnership generated net income of $40,000 for the year. What is Rex's capital balance after closing the revenue and expense accounts to the capital accounts?

Question

Quizplus · Accepted Answer

Rex's share of the net income is 3/5 of $40,000, which is $24,000. Adding this to his initial capital balance of $95,000 gives Rex a new capital balance of $119,000.

Rex and Kelsey Are Partners Who Share Income in the Ratio